OFT loses fight over bank charges

The Supreme Court today ruled in favour of high street banks in the bank charges test case brought by the Office of Fair Trading.

In 2005, a consumer backlash began against what were viewed by many as unreasonably high charges by banks for unauthorised overdraft use. In April 2007, the OFT began a study into the issue, launching a test case on unauthorised overdraft charges in July of the same year.

In April 2008, a High Court Judge ruled in favour of the OFT’s view that personal current account unarranged overdraft charges can be assessed for fairness. Since then, the case has passed through the appeals process all the way up to the Supreme Court, where the final ruling has gone in favour of the banks.

In a statement, the British Banker’s Association said:

“The Supreme Court has today confirmed that the Banks’ unarranged overdraft charges are an important part of current account services which the Banks provide to their customers and that the amount of those charges is not assessable for fairness.”

“The Banks acknowledge the unanimous decision of the Supreme Court to allow their appeal in respect of these charges. We recognise this issue has been of real concern to a large number of our customers and we are pleased that this decision now brings clarity for all parties.”

“The Banks will work with the regulators to ensure that the outstanding customer complaints are brought to a swift conclusion. We will also continue to work together with the OFT in connection with its on-going Market study.”

Which? chief executive, Peter Vicary-Smith, says:

“This is a bitter blow for the millions of people who have been patiently waiting to get their bank charges back.”

“Not only does it give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance. The banks now have no excuse for introducing other fee charges.”

“The banks have done everything possible to frustrate the OFT throughout this process. The OFT and the Government should now explore other avenues it can pursue to get a fair deal for consumers.”